03/01/2012

Reform Watch: The ABCs of the individual mandate controversy

During the next few months, you'll hear much about the controversial "individual mandate" provision of the Affordable Care Act (what some call "Obamacare").

As an ordinary guy burdened with a health policy background, I feel compelled to explain the nuances of the individual mandate in plain English, as the U.S. Supreme Court gets ready to hear arguments for and against it. A few basic facts:

The individual mandate requires every American to carry health care insurance or pay a fine.

Opponents of the mandate provision argue Congress overstepped its constitutional bounds by approving a law that forces citizens to purchase a product (in this case, health insurance) they might not want.

Defenders say that obtaining coverage is a responsibility of all citizens since everyone will use health care at some point of their lives. In the absence of the mandate, people without coverage would essentially "freeload" the system when they need care but are unable to pay for it.

For its part, the Obama Administration maintains the individual mandate is an essential part of the health reform law because it will keep insurance premiums from skyrocketing.

By requiring everyone to obtain insurance coverage and spreading out the risk pool, supporters say the individual mandate supports two other provisions of the ACA that would otherwise make premiums unaffordable to many Americans.

One provision (known as "guarantee issue") requires insurers to issue products to all customers regardless of pre-existing health conditions. The other provision (known as "community rating") bars insurers from charging higher premiums based on a person's medical history. Unlike the individual mandate, polling shows guarantee issue and community rating are popular with most Americans.

Among the 26 lawsuits, three courts have overturned the law (or part of the law), six courts ruled the law constitutional and dismissed the cases, nine courts have dismissed the case for "lack of standing" or procedural problems and eight court decisions are still pending.

Meanwhile, the topic has been discussed for months on the campaign trail by politicians, on the talk radio circuit and on the blogosphere.

But any argument about the individual mandate is a good or bad public policy – constitutional or not – will take on additional intensity once the nation's highest court weighs in.

In November, 2011, the U.S. Supreme Court agreed to consider several issues related to the constitutionality of the ACA arising out of two cases in the 11th Circuit Court of Appeals. The court will consider the constitutionality of the individual mandate and the ACA's Medicaid expansion.

If the mandate is ruled unconstitutional, the court will need to decide if the ACA can "survive" without the provision, or if other provisions (such as the aforementioned guarantee issue and community rating) should be removed from the law.

According to Stuart Taylor, contributing editor for the National Journal, the court could invoke the "anti-injunction act," which says no court can enjoin a federal tax until it's actually being collected. Under that scenario, the court wouldn't consider the issue until 2015 because fines for failing to obtain health insurance won't be collected until 2014. Taylor recently explained the scenario in this analysis in Kaiser Health News.

All the speculation about the individual mandates will end soon enough. The court will hear the arguments in late March and is expected to make a decision by June of this year.

Whether you support or oppose the ACA, the Supreme Court's decision will have major implications on health care and health policy for years to come – along with setting the stage for more debate on how best to provide quality, affordable care for all Americans.